Little Fish Big Pond

Evan Williams                                                                                                                     Week 3:  Localism Example

Little Fish; Big Pond

Community based enterprises encounter an interesting dynamic when addressing the expansion of their organization.  The Agua Dulce example typifies this point, and it can be observed in other organizations as well.  Their unique structure and culture, which makes these CBE’s successful upon startup, proves to be a major setback for them in expansion.  This unique situation is one of the most challenging dilemmas that the organization must overcome to successfully grow.

Agua Dulce’s community emphasized an accountability that was established within the social structure of the developing community.  This created a notably unique organizational structure that was highly dependent upon community participation.  Due to the community’s vested interest in the project, and majority participation in the organization, a highly effective system of checks and balances was established at Agua Dulce.  This inter-organizational system of self regulation proved to be an essential key to the CBE’s success.

Ingvar Kamprad, founder of IKEA, experienced considerable difficulty in expanding his culturally unique company internationally ‘Rapid growth would make it difficult to retain the company’s cultural values.” (Bartlett, 1990)  It is clear to see that unique organizations have difficulties in transferring their specialized cultures in their expansion endeavors.  When the culture is a key element in the company’s success, this turns into a serious problem.  Agua Dulce, as well as other CBE’s, has the same problem in their expansion efforts.

In an interview with Mikel Lezamiz, Mondragon’s director of cooperative dissemination, Lezamiz provided interesting insights into the organization’s most pressing challenges.  He said: “How can we maintain the cooperative values and principles when we expand to other countries.  Mondragon is based on a commitment through solidarity.” (Hollender, 2011)  Lezamiz had further explained that in the countries where Mondragon has looked to expand into, they were having difficulty in turning employees to cooperative members.  Mondragon, much like Agua Dulce, hinges upon not only workers, but workers who are vested in the organization through membership.  Without membership, they run into financial setbacks, but worst of all the social structure and accountability suffers considerably as well.

Therefore, to succeed locally the CBE institutes an organizational structure which will paradoxically inhibit its ability to grow beyond the local level.  One could presume that this is simply an inherent limitation of most CBE’s.  Assuming this infers that these types of enterprises can only expand beyond the local realm by reorganizing their overall structure.  This thought process could be challenged, however, by delving deeper into the IKEA case.  Ultimately, IKEA was successful in its global expansion.  It had effectively opened international stores without compromising their original unique culture.

It should be feasible to replicate and expand the distinctive organizational structure of the CBE.  Execution and planning of this growth, however, would need to be conducted as an exploratory endeavor.  As was the expansion planning at IKEA, expansion planning would need to be thoroughly strategized.  An exceptionally keen attention to demographics must be utilized in order to determine the availability of the most invaluable resource for the CBE, its employees and cooperative participants.  Without careful strategizing for full cooperative participation, the organization will fall short on establishing its essential social structure.

Works Cited:

Hollender, Jeffrey. “A Visit to Mondragon: Interview with Mondragon’s Director of Cooperative Dissemination.” A Visit to Mondragon: Interview with Mondragon’s Director of Cooperative Dissemination. N.p., 01 Aug. 2011. Web. 30 Oct. 2012. <http://www.jeffreyhollender.com/?p=1700&gt;.

Bartlett, Christopher A. “Ingvar Kamprad and IKEA.” HBS Premier Case Collection(1990)

 

Response:

If an enterprise, structured much like that of a CBE, strives for global expansion, they truly have a complex feat to overcome.  Some proven success of privatized growth models may be implemented; however, these enterprises must proceed with great attention to preserve the dynamic culture.  Also since the cooperative model has a member owned and operated structure, the mission must be kept centralized as the ownership is diluted locally to a global presence.

In order to strike an effective balance between a privatized growth model and organic culture, an enterprise could proceed with exploratory growth teams.  This consists of a group of seasoned cooperative members who are solely responsible for establishing the enterprises’ culture and mission among the employees at the new location.  Another group focusing on the actual start up of the new location with regards to logistics required for operational viability.

The group responsible for transferring the core of the enterprise is especially detrimental in expanding an organization like a CBE.  Quite simply, without the mission and the unique culture, the enterprise would be ineffective.  This core growth group would need to focus intently on training.  One of the only ways to impart the beliefs and norms of an enterprise on to new employees is through intensive training.  A constant attention to the key aspects of the mission and the culture should be utilized as well.  This could consist of things as simple as posters reminding the new employees of the core values.  Quite simply a vast attention on human resource management would be essential.

Finally, follow up assessments would need to be utilized to track the effectiveness of the orientation and training.  Industry metrics would be key to determining the new locations evolution.  Deficiencies in this area would clearly suggest problems with the new location’s core.  Ongoing assessment interviews should be utilized to gauge the new staff’s comprehension of the culture as well.  This will ensure they are ready to function more independently from the enterprise’s parent location.

Expansion globally will most certainly never be an easy feat.  The core and culture of organizations must never be put at risk for the sake of sheer growth.  However, a unique balance of a strategic privatized growth model with a core focused growth model should enable enterprises as complex as CBE’s to expand without compromising their true values.

Advertisements

One thought on “Little Fish Big Pond

  1. tlhill2012 November 24, 2012 at 1:08 PM Reply

    Growing to scale is a huge issue for community based enterprises.

    One response is, why bother? Perhaps scale is the problem, and CBEs should find the “right” (in the Buddhist sense) scale and stick to that: large enough to be efficient but small enough to be manageable. Leopold Kohr has written a fair amount about scale, as has EF Schumacher (small is beautiful), and both suggest that the solution to many problems ranging from pollution to (lack of) democracy is to stay small.

    If growth seems desirable, then cellular growth might be the way. WH Gore (gore-tex) for example, a radically democratic firm, limits the size of each work space (plant, office) to 200 or so – to facilitate direct communication and problem solving, without giving up too much efficiency.

    Or systems of representation – such as Mondragon’s elaborate one (thanks for bringing that in).

    In the end culture turns out to be critcial, and Ikea is a good example of the power of culture, if also a bad example of other aspects of CBE’s, notaby stakeholder voice, internalization of externalized costs, etc.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: